Last year was tough for PC vendors across western Europe, and the first quarter of 2013 showed little sign of recovery. According to our preliminary vendor sell-in shipment data, the top 10 vendors lost almost 22 per cent, achieving only 10.8 million units in Q1 2013 from Q1 2012. Distributors also saw their fair share of challenges.
Sales to commercial channels suffered from the lasting volatility of fiscal markets in the eurozone and the negative impact this has had on business IT investment. Distributor sales to consumer-oriented channels have been suffering for some time from tight consumer budgets and the transition to tablets and smartphones.
PC demand in the second half of last year was much weaker than forecast and not helped by the October launch of Windows 8. Distributors also battled considerable excess inventory – shipped into the channel during the first half in anticipation of stronger sales.
What our data shows
Our data shows that PC sales across western European distribution were down 14 per cent year on year in Q1, following a 19 per cent decline year on year in Q4 of 2012, and a 19.3 per cent fall in Q3. The UK, however, outperformed the average consistently last year – and in Q1.
It still saw weaker demand, and consolidated PC sales shrank five per cent in Q113 versus the prior-year quarter. However, sales of mainstream notebooks grew two per cent year on year, partly offsetting desktop and netbook declines.
Reasons vary. First, like last year, the UK economy in Q113 was less affected by the financial crisis than southern countries such as Spain and Italy. According to my channel sources, UK distribution has been less affected by excess inventory than some of those countries as well.
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A focus on the low-end, low-spec market has helped UK growth. Traditionally driven by strong consumer focus on price, the UK market in the second half of 2012 was characterised by aggressive retail promotions and a push in lower-spec products.
In Q1, this was also evident in some parts of the business market. In the notebook segment, 18 per cent of Windows systems sold were low end, £150 to £300 distributor price band, compared to four per cent a year ago. The unit mix shift towards the low end also saw consolidated business notebook distributor ASPs fall from £517 to £473 in the quarter.
While price promotions have left their mark on revenue, the UK outperformed its western European neighbours in terms of PC volume and revenue growth across distribution in Q1. Consolidated PC revenue for UK distribution was up one per cent year on year in local currency – western Europe on average saw revenue fall 11.5 per cent, in euro terms, in the period.
Margins remain challenged, and PC vendors expect the new hybrid notebook/tablet systems, combining Win 8 touch functionality with a full-sized keyboard, to drive more profitable growth.
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When back-to-school demand hits the market, these should boost PC sales at the higher end of the product spectrum. Demand will remain strongly price dependent, especially in a price-focused market such as the UK, where current distributor ASPs for Win 8 notebooks with touch functionality command about £90 more than non-touch Win 8 models.
With pricing for touch notebooks high and the new-hybrid market still evolving, consumers will continue to go for slate-type offerings, instead of replacing their traditional home computer. Slate sales across UK distribution were up 450 per cent in Q1 versus last year, driven by iPads and a stronger demand for cheaper Android systems.
Marie-Christine Pygott is an analyst at Context
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